Which of the following statements are correct?

1. The marginal cost of funds-based lending rate (MCLR) is the minimum interest rate that a bank can lend at.

2. MCLR is closely linked to the actual deposit rates.

3. Under the MCLR regime, the banks are not free to offer all categories of loans on fixed or floating interest rates.

Select the correct answer using the code given below:

• The marginal cost of funds-based lending rate (MCLR) is the minimum interest rate that a bank can lend at. MCLR is a tenor-linked internal benchmark, which means that the rate is determined internally by the bank, depending on the period left for the repayment of a loan.

• MCLR is closely linked to the actual deposit rates and is calculated based on four components: the marginal cost of funds, negative carry on account of cash reserve ratio, operating costs and tenor premium.

• The Reserve Bank of India introduced the MCLR methodology for fixing interest rates from 1st April 2016. It replaced the base rate structure, which had been in place since 2010.

• Under the MCLR regime, the banks are free to offer all categories of loans on fixed or floating interest rates. The actual lending rates for loans of different categories and tenors are determined by adding the components of spread to MCLR. Therefore, the bank cannot lend at a rate lower than MCLR of a particular maturity, for all loans linked to that benchmark.